Insider has written before about the dangers of using a middleman who marks up billboard properties without you knowing it.  Same thing applies to doing business with a middleman who stands between you and a billboard’s landlord.  Take the case of Stevenson v Clausel:

• In 1964, Liberty Sign Company agreed to fabricate and install a billboard which it would lease to William Stevenson.  The agreement was not specific as to location put provided that Liberty would maintain the billboard, own the billboard and permit and have the right to remove the billboard in the event of a default.  When he signed the agreement with Liberty, Stevenson owned no land and did not have a site for the billboard.

• In 1965 Stevenson signed a billboard lease with Glen Clausel (“the Landlord”).  The lease had three very bad provisions: (1)  all improvements to the property (e.g. the billboard) could not be removed without the Landlord’s consent; (2) on termination of the lease all improvements would become the Landlord’s property; (3) the Landlord was permitted to place a lien on the structure and improvements to secure the agreement.

• Liberty fabricated, installed and leased the sign to Stephenson without verifying the terms of Stevenson’s underlying lease with the Landlord.

• Stevenson operated the sign for one year and then defaulted on his payments to Liberty and the Landlord.

• The Landlord went to court and got a judgement which awarded him the billboard as compensation for damages.

• Liberty Sign sued the Landlord, claiming that it owned the billboard under an agreement with Stevenson.  A lower court and the Houston Court of Appeals said that the Stevenson’s agreement with the Landlord trumped Stevenson’s agreement with Liberty Sign so the Landlord owned the billboard.  The court highlighted the fact that Liberty Sign could have taken steps to verify the underlying property owner and the terms of the underlying lease:

 “Liberty proceeded to install the billboard and attach it to such premises…Liberty’s vice president testified that in taking the action that it took, Liberty relied solely on the representations of Stevenson… Liberty must now be content to look to Stevenson, the party in whom it has placed its reliance.”

Insider’s take:  Never, never agree to put a billboard on a property, take an assignment of a billboard lease or sublease a billboard unless you’ve seen the underlying lease with the landlord.

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